Country fiche for Sweden

General information

Sweden has accelerated its activity in the alternative financing sector and offers (as of 2016) approximately seven local platforms, with a wide range of business models and nearly all types of crowdfunding models.

AF market volume per capita

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Role of alternative finance

Overall size of the market:

Sweden raised EUR 13m through alternative financing in 2015. Between 2014-15, a major platform based in Sweden went bankrupt due to a widely-reported scandal involving the misappropriation and misuse of funds. This led for the Nordic countries to the total alternative finance volume for 2014-15 to fall by almost a fifth in that year but still remained well above the 2013 figure of EUR 94m.

Trend:

There was a sharp drop in P2P consumer lending because of the failure of one of the major platform in Sweden between 2014 and 2015. This led to the total alternative finance volume for 2014-15 to fall by almost a fifth in that year, but still remained well above the 2013 figure of EUR 94m. This affected the overall market volume of the Nordic countries with a drop of 19% in 2015 compared to the previous year.

Total crowdfunding platforms:

There are currently between 10-15 active Crowdfunding platforms in Sweden

Some Platforms include:
- FundedByMe.com (equity + P2P consumer lending) was launched in 2011.
- Toborrow.se (P2P lending) started in 2013 and is available for C2B as well as B2B.
- Crowdculture.se, Takespace.se and Agreatday.tv is a donation based platform. Agreatday has recently removed the rewards part and operates only using donations.
- Tessin.se (2014) is a real estate crowdfunding platform.
- Trustbuddy.se (P2P lending) filed for bankruptcy in 2015.

Crowdfunding Platforms specialising on R&I:

There is one active platform dedicated to R&I: TRINE, that focuses on energy projects.

Evidence

Equity-based crowdfunding

EUR 6,5m in 2015.

Reward and donation-based crowdfunding

Rewards-based Crowdfunding raised EUR 4,6m in 2015.

Lending crowdfunding

Peer-to-Peer Consumer Lending raised EUR 2,0m in 2015.

Others

EUR 0,2m of Community Shares in 2015.

Regulatory Context

Evidence

Is there a specific national regulation in place applying to crowdfunding?

A Crowdfunding platform does not constitute a platform that trades transferrable securities of public companies. It only serves as an intermediary of the share transfer of private companies. Therefore, the equity platform models shall normally not fall within the scope of The Securities Market Act (lag om värdepappersmarknaden) and does not need a license to offer their equity services.

The donation and rewards models are not yet regulated under Swedish law. According to the Swedish legislator, these models need the least regulation, due to the low risks attached to the investments and because no financial investment or return is offered.

Main rule: all offerings of transferrable securities in companies are subject to prospectus requirements
Exemptions:
- the offer is directed solely to qualified investors;
- in a country within the EEA, the offer is directed to less than 150 natural persons or legal entities who are not qualified investors;
- the offer relates to a purchase of transferable securities for a sum equivalent to no less than EUR 100,000 for each investor;

Support policies

Overview:

Crowdfunding still has no legal definition in the Swedish regulations. Its regulation is allocated in different sections of the legislation, which was created a long time before the FinTech age. In the recent publication on Crowdfunding by the Swedish Financial Authorities (Finansinspektionen) it has been pointed out that, under certain circumstances, it is even unclear which public authorities should supervise crowdfunding activities.

Due to a lack of regulation of equity crowdfunding for private limited liability companies on platforms without MIFID, obtaining license is very complex. The Swedish Private Limited Liability Company called Privat Aktiebolag – is one of the most popular SME company types for legal entities in Sweden. Privat AB companies cannot advertise their desire to sell shares to the public and can’t take in more than 200 new shareholders in one share issue.

For potential investors to view financial information, business plans or financial forecast of a Privat AB during an equity-based crowdfunding campaign on a Swedish platform without a MIFID license, the platform requires the user to become an “exclusive member” even when signing up through social media accounts. After loging in, the “exclusive member” has full access to the information provided by the company. The platform does not advertise any offerings from Privat AB companies – it informs about the issue that the project seeks to fund. (Being informed about a share issue process is not considered advertisment.)

One of the leading platforms blocks the share issue process once the 200 investor limit is reached. If the company would like to continue to raise funding, the Privat AB board has to make a decision to issue shares for a second or third time. By doing this, the regulation of an intake of 200 investors can be enforced.

Main policy institution responsible in the country (ministry in charge of alternative finance):

Swedish Financial Authorities (Finansinspektionen)

Evidence

Matching funds initiatives

State-aid

Tax benefits

Crowdfunding guidelines for entrepreneurs / investors

Guidelines for researchers on crowdfunding for R&I

Additional insight

Success story of crowdfunding platfroms for R&I:

NAME: Crowdculture
DESCRIPTION: CrowdCulture opened in 2010 and is the longest running service for crowdfunding in Sweden. Mainlya rewards-based system. the platform receives both private and public funds.
LINK: http://www.crowdculture.se/se

Success story of crowdfunding projects for R&I:

PROJECT NAME: Digitalisation of the Rodeby School Orchestra
PLATFORM: Crowdculture.se
DESCRIPTION: The project aimed at digitalising all the documents related to the activities of the Rodeby School orchestra (1955-2003). The success of this project lies in the skill of the promoter in involving the local community, in order to preserve a part of the town's history.
AMOUNT RAISED: € 1,045 out of € 1,045
LINK: http://www.crowdculture.se/se/projects/digitalisering-och-bevarande-av-r...

Policy measures:

Policy measures that should be initiated:
- Legislate any MiFID or prospectus requirements.
- Raise the limit of prospectus requirement from 2.5 million to 5 million.
- Harmonise the Swedish Payment Service Act.

Within the next upcoming 18 months, a close cooperation between Swedish crowdfunding platforms and banks is expected. Until now, Swedish banks express a particular “love-hate” relationship with the platform operators. The banks in Sweden are aware of the changes caused by FinTech and crowdfunding in particular, but still have decided not to follow other traditional financial institutions in the UK or the USA, which already cooperate with platforms and have done for many years.

“In 2016, the crowdfunding industry in Sweden should continue to grow exceeding the European average. Despite very impressive growth rates on paper, all Swedish crowdfunding platforms combined will not generate more loans or provide more equity to Swedish companies in a year, than a big Swedish bank pays out on loans during a business week” – mentioned one of the Swedish bank executive during a personal interview. The question that arises from this, is how big does Crowdfunding have to be to partner-up with a Swedish bank?

Employees of crowdfunding platforms expressed that banks in Sweden use the ”low-volume-argument” for delaying cooperation with crowdfunding platforms. The more pressing issue is the lack of transparent and proportionate legislation, adapted to a digital industry. Even the Swedish Financial Supervision informs that the responsibility of supervision is unclear in Sweden, so it is hard to ensure that banks will take compliance risks.

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